Construction Association Urges Federal Officials to Issue Timely, Clear, and Consistent Regulations That Will Facilitate Spending to Proceed on a Wide Range of Projects Already Approved by Congress
Total construction spending in May increased by 0.9 percent from April and 2.4 percent year-over-year as gains in manufacturing construction and single-family homebuilding offset a downturn in major infrastructure segments, according to an analysis today by the Associated General Contractors of America of new federal data. Association officials cautioned that unclear and contradictory government regulations were slowing a variety of publicly funded projects and they urged the Biden administration to speed the awarding of contracts..
“The data for May show there has been no letup in the feverish pace of manufacturing construction but a very mixed picture for other project types,” said Ken Simonson, the association’s chief economist. “There have been strong year-over-year increases in most categories but it remains to be seen if the market is now cooling.”
Construction spending, not adjusted for inflation, totaled $1.925 trillion at a seasonally adjusted annual rate in May. Monthly and year-over-year changes varied among major segments. Spending on private nonresidential construction slipped 0.3 percent from April but jumped 20.5 percent from a year earlier. Spending on public nonresidential construction inched up 0.1 percent in May and 12.3 percent over 12 months. Private residential spending surged 2.2 percent for the month but remained 11.6 percent below the May 2022 level.
Two types of private nonresidential spending increased significantly in May, while most other categories lagged. Manufacturing construction jumped 1.0 percent for the month and 76.9 percent year-over-year. Office construction, which includes data centers, rose 0.7 percent and 6.7 percent, respectively. But monthly spending slumped 1.8 percent for commercial construction—comprising warehouse, retail, and farm projects—and 0.8 percent for private power construction. Private health care construction tumbled 2.1 percent for the month.
Public construction spending was mixed, as the largest infrastructure categories declined for the month and education spending was flat. Highway and street construction declined 0.4 percent from April and public spending on transportation facilities, such as airports, transit, and passenger rail, slid 0.8 percent. There were monthly increases of 1.1 percent in spending on sewage and waste disposal and 2.6 percent on water supply but a drop of 3.8 percent in conservation and development, such as river and harbor projects.
The pickup in private residential spending was led by a 1.7 percent increase in single-family homebuilding—the first gain since April 2022. Multifamily construction dipped by less than 0.1 percent, its first decline since July 2022.
Association officials urged the Biden administration to clarify the rules applying to U.S.-made construction materials, apprenticeship programs, and tax credits to fund promised energy projects. They warned that lack of clarity was keeping contractors from bidding on projects or proceeding on ones that had been awarded.
“Contractors are eager to build the infrastructure Congress has approved,” said Stephen E. Sandherr, the association’s chief executive officer. “It’s up to federal officials to make sure these projects can get built by issuing timely and clear rules that are consistent with Congressional intent.”